Monday, May 13, 2013

Does the state of Wisconsin have a long-term growth strategy ... or an economic development death wish?

As stark as that question might seem, it's worth asking as the political feeding frenzy continues over the performance of the state's largest economic development agency, the quasi-public Wisconsin Economic Development Corp.

A recent report by the Legislative Audit Bureau covering the first year of WEDC's existence disclosed a number of compliance, procedural and reporting issues, most of which the agency pledges to correct as it moves ahead. Formerly known as the Wisconsin Department of Commerce, WEDC was recast as a public-private entity in early 2011 in hopes the state could adopt a more nimble, market-oriented strategy for economic growth.

It was akin to changing tires on a moving car. The transition took place in less than six months, and more than a few items slipped between the cracks as the "old" Commerce department tried to transform itself into the "new" WEDC. That was apparent in the audit, which covered the period ending June 30, 2012.

As a result, a mix of lawmakers from both parties are supporting actions that would clamp down on WEDC and its employees, many of whom were around when it was still a traditional state agency. One provision passed by the Legislature's budget-writing committee would withhold a year's worth of funding – about $30 million – if WEDC fails to shape up.

Insisting on high standards for WEDC is one thing… jeopardizing Wisconsin's ability to compete in the national and global economies is quite another.

Wisconsin has always had trouble getting economic development right. It spends less than comparable states, generally focuses on yesterday's trends versus today's, and allows partisan politics to color what should be a statewide concern: Smart policies to enhance company and job creation.

Republicans were critical of Commerce during Gov. Jim Doyle's administration and Democrats are providing some measure of payback now, although WEDC also has its share of GOP critics. Assuming both sides can get beyond the politics at some point, here are some long-term considerations:

* Either state legislators agree WEDC should have some measure of private-sector flexibility or they don't. If they agree the new quasi-public structure is needed, accountability rules should be built with that model in mind.

* At some point, whether the agency is public, private or somewhere in between, it will become difficult for it to attract and retain talent. Who wants to go to work for an outfit that might lose all of its funding in a year?

* Wisconsin's competitors aren't standing still. They're marketing their state's assets, working with startup companies and entrepreneurs and generally doing all they can to take advantage of growth opportunities at home and abroad. One such opportunity comes at Wisconsin's risk: The perception that state government cannot agree on a reasonable economic development strategy. How long will it take for that message to show up on billboards on the Illinois and Minnesota sides of our borders?

None of this is meant to downplay issues uncovered by the audit, or the smugness surrounding WEDC's birth. It is simply a call for well-intentioned lawmakers to insist on a course correction without intentionally crash-landing the plane.

That begins with bipartisan agreement on what's working and what goals are important to Wisconsin. The state has an impressive foundation in place, but much more must be done to foster startups and emerging companies; to open international markets; to attract coastal and foreign investment; to build a more educated workforce and to create a business-friendly culture.

Every Wisconsin legislator professes to want the state's economy to become more competitive. Getting there involves following an agreed-upon path, even when potholes must be filled along the way.

-- Still is president of the Wisconsin Technology Council. He is the former associate editor of the Wisconsin State Journal in Madison.